Phorm Still Looking For A Large-Scale Deployment, Still Finding Investors

from the why-do-they-bother? dept

As a search through the Techdirt archives shows, Phorm's behavioral advertising service based on watching your Web activity was beset by problems in its early days. One of the last Techdirt posts on the company from a couple of years ago explained how Phorm was planning to expand overseas, and here's some news on how that's been going:

Despite Phorm softening the service in response to privacy concerns, three UK ISPs who trialled it decided not to go deploy it. Phorm moved operations to South Korea but the same happened. So it moved to Brazil.

Now operating on an opt-in basis, Phorm has finally gained actual commercial roll-out with Brazilian ISPs Oi and Telefonica and with Romania’s Romtelecom. With them, Phorm says opt-in rates have met or exceeded targets, advertiser prices have been “significantly higher than forecast” while publisher costs have met or undermet targets.

With this record, Phorm could certainly use with a few more big new markets; its financial results so far have been dismal:

The company had never recorded any revenue until the first half of this year, just $17,336. (£10902.53) In 2010, Phorm lost $28.6 (£17.99) million.

Despite that track record, it is predicting big things:

"The potential scale ... of the Brazilian business could be £7.03 ($11.13) million... The (value) of Romania could be £78 ($124.03) million," Phorm itself forecasts modestly to investors. These targets are based on Phorm scaling up from small, post-trial deployment to large-scale adoption.

It also has high hopes elsewhere:

Phorm says discussions with other global ISPs have also continued for the last three years. It plans to roll out in China and a southern Europe country early in 2012. It also says it is due to deploy in a southern Europe country it values at £483 ($768.01) million and a south-east Asian country it values at £82 ($130.39) million early next year.

Those are rather a jump from this year's six-month sales of $17,336. Undeterred by that fact, investors still seem to be piling in:

This time, it is raising £30 ($47.7) million, which will be used partly to repay a £16 ($25.44) million convertible-notes loan it took out this March and partly “to provide sufficient working capital to get to positive operational cash flow”. It is planning a cash burn of £1.1 ($1.75) million per month for the next year.

At this point, you could be forgiven for having lost track of how much money Phorm has raised and how much equity it has given out to finance its ongoing hefty losses. But paidContent has previously reported Phorm took a total £53 ($84.28) million between 2005 and 2010. The recent loan and latest funding bring that total to nearly £100 ($159.01) million.

That's pretty incredible: nearly $160 million for a service that has yet to prove itself in any large-scale deployment. There's something very strange about this persistent belief by investors that what the world is really waiting for is a service that watches your every move online to serve up targeted ads and content.

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Filed Under: deep packet inspection, investment, privacy
Companies: phorm

On Second Thought... NebuAd Not Really Dead... Re-Emerges In The UK Under An Assumed Name

from the nice-one! dept

After writing about how NebuAd had shut down, a commenter pointed out this wasn't quite true. Instead, it appears the company has just re-appeared under a different name in the UK... where officials have ruled that clickstream tracking behavioral advertising can be legal (though that's gotten the UK into trouble with the EU). Apparently, NebuAd had opened a UK office, and with the shutdown of US operations, the UK office re-branded as Insight Ready Ltd., but it appears to be the same basic company, including same employees. And the Insight Ready domain name was registered by NebuAd....

Filed Under: behavioral advertising, clickstream tracking, uk
Companies: insight ready, nebuad, phorm

UK Officials Accused Of Colluding With Phorm

from the that-would-not-be-good dept

While the US quickly condemned clickstream tracking as a likely violation of privacy, many were quite surprised when UK officials went in the other direction, suggesting that Phorm's tracking was legal. The European Commission was so annoyed by this that it's taking legal action against the UK for privacy violations. But, still, many people are wondering why the UK government said something like Phorm was legal... and now accusations are coming out that it's because UK government officials let Phorm take part in writing the policy. There are a bunch of incriminating emails between the Home Office and Phorm, including one where officials ask Phorm execs if they would be "comforted" by the position the gov't was about to take. In another, the officials ask Phorm to review the document and give feedback, prior to the gov't releasing the actual policy. Talk about regulatory capture... The government, for its part, claims that people are misreading the emails, but it's difficult to see how the emails can be misread when they blatantly ask Phorm to review the document, and inquire whether the company and its partners will be comforted by the ruling.

Update: On top of this, it appears that Phorm is now lashing out at critics, claiming that they're "smear merchants" and "privacy pirates." That sounds convincing...

Filed Under: behavioral advertising, collusion, privcy
Companies: phorm

Europe Begins Legal Action Against The UK For Allowing Phorm To Proceed

from the a-little-privacy,-please dept

We were quite surprised when the UK gave a basic approval of Phorm's clickstream tracking/behavioral advertising effort -- despite widespread consumer outrage that their internet surfing was being tracked and sold for advertising purposes. And given that simple approval, Phorm has been looking to aggressively expand. However, it appears that other officials may have a different idea. The European Commission has "started legal action" against the UK for allowing Phorm to proceed, saying that it seemed likely to violate European privacy rules. Who knows if this will actually go anywhere, but it seems pretty clear that the rather widespread mistrust of Phorm is making sure that it's not able to do much at all without additional scrutiny.

Filed Under: behavioral advertising, clickstream tracking, europe, privacy, uk
Companies: phorm

Phorm, Apparently Deaf To Consumer Hatred Of Being Spied On, Plans Expansion

from the seriously? dept

Phorm is the highly controversial behavioral advertising firm that teams up with ISPs to spy on your surfing habits and deliver targeted ads. The practice has raised a number of legal challenges and protests from users who were "tested on," without their knowledge. While Phorm has been found to be legal in the UK, its practices have still engendered widespread anger. Yet, the company seems particularly deaf to those concerns, and is talking about plans to expand internationally, despite the fact that similar schemes have run into legal troubles elsewhere. Perhaps before looking to expand internationally, Phorm should work on fixing its business model.

Filed Under: behavioral ads, clickstream tracking
Companies: phorm

BT Bans Talking About Phorm, Erases Earlier Discussions

from the we-were-always-at-war-with-Eurasia dept

You may recall that BT was one of the bigger supporters of Phorm, the controversial clickstream tracking system that would allow ISPs like BT to insert their own behaviorally targeted ads into your web surfing. The company held extensive trials with the system, without letting users know that their clickstream data was being sold to advertisers in order to do more targeted advertising. Now that UK officials have decided that Phorm is legal, if clearly explained to consumers, BT has chosen a funny way to make sure there's clarity around the system. Slashdot points out that BT has apparently banned discussion of Phorm on its forums and erased earlier forum discussions about the technology. How's that for openness?

Is it really so hard to allow open discussion on such a topic? If BT believes that it's reasonable to use the technology, then why not explain why clearly, responding to the critics? The only reason to erase these discussions is if BT knows that what's it's doing is highly questionable, and BT would rather not have to explain itself.

Filed Under: bans, clickstream tracking, secrecy
Companies: bt, phorm

UK Police Stop Phorm Investigation, As They Don't See Any Criminal Behavior

from the civil,-however.., dept

While American competitor NebuAd may be on the verge of shutting down, it appears that Phorm, the controversial clickstream tracking, behavioral ad company that focused mainly on the UK market, may be dodging a series of bullets. First, the government said that clickstream tracking could be legal if the situation was clearly explained to customers and there was an obvious mechanism for opting out. Now, UK police are dropping their own investigation of earlier trials with BT, which many believed were illegal because they were done with no notice to consumers at all, and no way to opt-out. That would seem to go against the government's earlier statements, but the police are saying that there's no evidence that this is a criminal matter -- which would leave this open to civil lawsuits from individuals who were impacted by the trials.

Filed Under: clickstream tracking, isps, legality, spyware, uk
Companies: phorm

UK Says Phorm Clickstream Tracking Is Okay... If Clearly Explained To Customers

from the we'll-see-what-customers-say dept

With US-based clickstream tracking company NebuAd on the rocks, similar UK competitor Phorm has actually received approval from the UK government, despite concerns over legality. Apparently, the UK has decided that as long as Phorm clearly states what's happening, allows easy opt-outs (even if users change their minds later), then it's fine. What's not clear, though, is how the government will treat Phorm's early tests, which did not include clear notification or easy opt-outs. In the meantime, if such programs really are clearly communicated to users, do you think enough people would opt-in to make it worthwhile?

Filed Under: clickstream tracking, uk
Companies: phorm

Phorm Secretly Used By American ISPs As Well

from the totally-transparent? dept

Looks like Phorm may be facing another headache as The Register has found out that it was quietly used by some American ISPs, as well. Earlier stories had suggested that Phorm, which tracks your web surfing at the ISP level and customizes ads based on your clickstream data, was only testing the service in Europe, while competitor NebuAd was focused on the US. Phorm is facing some legal inquiries in Europe, while NebuAd is laying people off as Congress is investigating the legality of the service.

But the most bizarre aspect of this is Phorm's claim that its tests with US ISPs was "transparent." If that's the case, it's odd that no one had pointed it out before. That would suggest that it wasn't nearly as transparent as Phorm claims. In fact, it suggests the opposite.

Filed Under: clickstream tracking, isps
Companies: nebuad, phorm

NebuAd In Trouble After Congress Suggests Its Entire Business Is Illegal

from the oops dept

We've covered the saga of companies like NebuAd and Phorm, who basically worked with ISPs to access your clickstream data and place advertisements based on your overall surfing habits, rather than the specific page that you're on at that moment. It didn't take long before people realized that such services (beyond just being somewhat deceptively implemented by ISPs) were probably illegal. And, of course, given the public outcry over these services, it didn't take long for Congress to get involved, suggesting that it felt these activities were illegal.

So, of course, if you happen to work at Phorm or NebuAd, you've got a bit of a business model problem (not to mention the potential legal problem). The Register is reporting that NebuAd has now laid off a bunch of employees -- and also dumped its PR firm. Considering the fact that no amount of PR probably could have stopped consumer outrage over how these services were implemented, it seems like the PR firm may have been something of a scapegoat --- or, perhaps, the company just realized that any PR work at this point is simply futile.

Filed Under: clickstream tracking, isps, legality
Companies: nebuad, phorm